2+ (20 - 22)2+ (23 - 22)2} / 5 = 35.60%2
Population standard deviationis the square root of the population variance.
Example:Continuing with our example, take the square root of 35.60 =5.97%
Sample varianceapplies when we are dealing with a subset, or sample of the total population.
Example:Assume the five-year annualized total returns for the five investment managers used in the earlier example represent only a sample of the managers at a large investment firm. What is the sample variance?
sample mean = {30 + 12 + 25 + 20 + 23} / 5 = 22%
s2= { (30 - 22)2+ (12 - 22)2+ (25 - 22)2+ (20 - 22)2+ (23 - 22)2} / 5 - 1 = 44.5%2